'Little' carbon tax effect

The Bureau of Statistics says the most significant price rises in the December quarter were for domestic travel and accommodation (which rose 6.2 per cent, but tends to rise in the lead-up to Christmas), automotive fuel (up 2.6 per cent) and rents (up 0.8 per cent).

Offsetting those rises were a 5.7 per cent slide in vegetable prices, a 4.3 per cent fall in audio, visual and computing equipment, and a 3.5 per cent decline in the price of pharmaceutical products.

TD Securities strategist Alvin Pontoh says the carbon tax does not appear to have had as much of an impact outside energy prices as Treasury had been forecasting, possibly because businesses are absorbing cost increases due to weak consumer demand.

"The carbon tax impact is not estimated by the ABS. However, this tame inflation report contains little or no evidence of any indirect pass through from the introduction of the carbon tax in July," he observed in a note on the data.

"Previously, Treasury had estimated that it would add 0.7 per cent to headline CPI in 2012-13 and the RBA assumed that the indirect pass-through 'occurs over three quarters'."

Darwin had the lowest rate of inflation, with no price rise in the quarter, while Sydney recorded a modest 0.1 per cent CPI increase.

Brisbane and Perth had 0.3 per cent price increases, while all the other capitals had a 0.4 per cent CPI rise.

However, Sydney and Darwin had the largest price rises over the past year, at 2.5 per cent, while Hobart's 1 per cent CPI increase was by far the smallest.